“When you look at the fundamental picture for the issuers of these bonds, it’s pretty healthy,” Hayes said.  

But heavy debt issuance will probably return to the market in January, as is typical to start a year.

Just a few weeks ago, fears of that selling pressure were enough to push US high-grade spreads to as wide as 0.85 percentage point on average, or 85 basis points. JPMorgan said that massive investments from tech companies and others in artificial intelligence would probably drive $1.5 trillion of investment-grade bond sales over the next five years.

Oracle’s recent weakness underscores how even if investors are broadly confident in companies’ ability to repay their obligations now, fear can emerge about particular firms. Some of the high-grade notes that Oracle sold in September are now trading more like junk bonds. Paper losses on the $18 billion of bonds are now around $1.35 billion. (The company says it’s committed to keeping its investment-grade status, and regarding its data centers, a spokesperson said there have been no delays to any sites required to meet contractual commitments and all milestones remain on track.)

With valuations broadly so high already, it’s hard to argue that it’s the optimal time to buy, Barclays strategists said earlier this month.

“There’s very little upside potential offered from here,” they wrote.

Week In Review

• Just days after a trio of Wall Street banks agreed to write a $59 billion check to finance Netflix’s planned acquisition of Warner Bros., two banking heavyweights teamed up with alternative asset giant Apollo on $54 billion of financing that backs Paramount Skydance’s hostile bid for the Hollywood firm.

  • Netflix built its business on the back of the junk bonds, earning the nickname Debtflix. It’s looking to repeat that playbook with its $72 billion deal to buy Warner Bros., though via the safer, cheaper investment-grade bond market.

• Credit markets have become so accommodating heading into year-end that debt underwriters are opting to offload the debt to investors quicker than usual, ahead of a year in which hyperscalers may overwhelm the market with AI infrastructure financing.

• A measure of Oracle Corp.’s credit risk reached a fresh 16-year high Thursday, after the database company’s higher spending on data centers and other equipment raised fresh doubts about how quickly the firm can generate profit from its huge artificial intelligence investments.

• Several key lenders to bankrupt First Brands Group have headed for the exits in recent days, sending advisers into crisis mode to calm nerves as the price of a key loan plunged into the 60s.

  • The rapid selloff in a First Brands rescue loan shows how chaotic the failed auto-parts maker’s bankruptcy has become as advisers struggle to shore up cash while untangling a web of fraud allegations.

• So-called distressed disposals, where restructurings are being fast-tracked by cutting out minority lender groups, are fast becoming a go-to tool for stressed companies.

• In a break from its usual blue-chip advisers, Patrick Drahi’s Altice International tapped hedge fund Merlyn Advisors to mastermind a maneuver that shifted assets outside the grasp of creditors.

• The amount of capital that private credit firms have deployed reached a record last year, according to a new report from the Alternative Credit Council. While the figures come with a lag, the limited visibility into private-credit markets and the lack of consistent deployment data make the 2024 numbers a useful benchmark.

• Data center operator CyrusOne is considering selling about €600 million ($697 million) of debt tied to its European data centers, according to people familiar with the plans.

  • The credit arm of Carlyle Group Inc. is providing a debt package of €290 million ($338 million) to France’s Mecachrome in a rare private credit deal that taps into Europe’s military buildup.

  • Sycamore Partners offloaded wine company Ste. Michelle Wine Estates in a deal that foisted losses on the private equity firm and the company’s lenders as the industry faces tariff pressures and slumping demand from younger consumers.

  • Pye-Barker Fire & Safety LLC, a provider of fire protection services and equipment, is poised to slash its borrowing costs by refinancing more than $2 billion of private debt. A group of banks led by Goldman Sachs Group Inc. is finalizing the terms on the firm’s $2.18 billion first-lien and $325 million delayed-draw term loan.

• The European Central Bank proposed changing the market for AT1 bonds to make them more like equity capital, but provided no details on how that would work.

On the Move

• Deutsche Bank AG has hired Sean Perkins as a director in US high-yield research, following Kevin King who began earlier in December as a director in US distressed sales. They previously worked at Walleye Capital and UBS Group AG, respectively. Sonika Singh will join in February as a director in US high-yield sales, and previously worked for Bank of America.

• Lazard Asset Management hired Alex Kozhemiakin to help oversee its emerging-market debt platform in New York. Kozhemiakin was most recently with Macquarie Asset Management.

• KKR Inc. has appointed Vonovia SE Chief Executive Officer Rolf Buch, who will leave the German landlord at the end of this year, as executive advisor.

–With assistance from Caleb Mutua and Dan Wilchins.

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